South Korea CPI inflation may have remained benign in May

South Korea will release June CPI inflation data on 1 July. Inflation is expected to have eased to 0.1% m/m from 0.3% in May, but to have picked up to 0.8% y/y from 0.5% on the gradual increase in oil prices and the c.2.8% weakening of the Korean won. 

Drought in the eastern half of the country has led to price hikes in agricultural products. Retail sales have been increasing steadily rise since February. New hires in May totalled 379,000, the most in five months. Wages picked up in February (+16.4% y/y) and March (+3.9%), and the increase in spending is expected to have been on track before the Middle East Respiratory Syndrome (MERS) outbreak on 20 May. It is believed that the drop in consumption limited inflation in June.